Gold and silver prices extended their gains on the Multi Commodity Exchange (MCX) for a second consecutive session on Wednesday, supported by a weaker US dollar and falling bond yields. The move comes as traders turn their attention to the upcoming US nonfarm payrolls report, which could offer fresh clues on the Federal Reserve’s interest rate path.
What drove the latest rally
The US dollar index softened against a basket of major currencies, making dollar-denominated gold cheaper for holders of other currencies. At the same time, yields on US Treasury bonds eased, reducing the opportunity cost of holding non-yielding bullion. These two factors combined to lift gold and silver prices on both domestic and international markets.
Geopolitical tensions also continued to provide a floor for gold, with investors seeking safe-haven assets amid ongoing uncertainty. The combination of a softer dollar, lower yields, and geopolitical risks has kept gold well-supported in recent sessions.
Focus on US jobs data
Market participants are now awaiting the US nonfarm payrolls report, scheduled for release later this week. The data is expected to show the number of jobs added to the US economy in August, and will be closely watched for signals on the Federal Reserve’s next policy move.
If the labour market remains strong, the Fed may feel less pressure to cut rates soon, which could weigh on gold. Conversely, a weaker reading could reinforce expectations of monetary easing, providing further support for the precious metal. Traders are therefore positioning cautiously ahead of the release.
Technical levels under scrutiny
On the technical side, gold is trading near key resistance levels on the MCX. A sustained break above these levels could open the door to further upside, while failure to hold recent gains might trigger a pullback. Silver, meanwhile, has also shown strength, with prices rising by around Rs 3,300 per kilogram over the two-day rally.
Domestic physical gold prices in major cities such as Delhi, Mumbai, and Chennai have followed the trend, with jewellers adjusting their rates in line with the MCX futures. The live gold price on the exchange remains the primary reference for physical market participants.
Key takeaways
- Gold and silver rose for a second straight session on MCX as the US dollar weakened and bond yields eased.
- Investors are focusing on the upcoming US nonfarm payrolls data for clues on the Fed’s policy direction.
- Geopolitical tensions and softer yields continue to support gold prices.
- Traders are monitoring key technical levels on the MCX for potential breakouts or reversals.
Common questions
Why do gold prices rise when the dollar weakens?
Gold is priced in US dollars on international markets. When the dollar falls, it takes fewer units of other currencies to buy the same amount of gold, boosting demand and pushing prices higher.
What is the nonfarm payrolls report?
The nonfarm payrolls report is a monthly US government statistic that measures the number of jobs added to the economy, excluding the agricultural sector. It is a key indicator of labour market health and influences Federal Reserve policy decisions.
How do bond yields affect gold prices?
Gold pays no interest or dividends. When bond yields fall, the opportunity cost of holding gold decreases, making it more attractive to investors. Conversely, rising yields tend to weigh on gold.
The rally in gold and silver this week highlights the market’s sensitivity to macro data and geopolitical developments. With the nonfarm payrolls release on the horizon, volatility is likely to remain elevated. Traders will be watching both technical levels and fundamental triggers to gauge the next direction for precious metals.